Machine Replacement Decision Differential Analysis Continue with (Alt. 1) or Replace (Alt. 2) Old Machine December 10 Continue with Line Item Description Old Machine Replace Old Machine Differential Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues: Proceeds from sale of old machine $ s Costs: Purchase price Variable productions costs ( 8 years) Profit (loss) a.2 Determine whether to continue with (Alternative 1) or replace (Alternative 2 ) the old machine. b. What is the sunk cost in this situation? The sunk cost is \$